Now, the senator in my neighboring state of Iowa is once again trying to wake up Congress to the facts. You may recall that Senator Chuck Grassley (D-IA) admitted almost a year ago that he and the other members of Congress were fooled into voting for the bailout because they thought former-Treasury Secretary Paulson actually knew what the hell he was doing when he asked for $750 billion in the fall of 2008. “When it’s all said and done, you realize he didn’t know anything more about it than you did.”

Late last week, the Huffington Post called our attention to a letter that Senator Grassley sent to Goldman Sachs about the fees they will collect on the next bit of federal stimulus – bonds that are used to underwrite the latest jobs bill. Grassley points to a November 27 report from Bloomberg News for some evidence that Goldman may be over-charging local governments by more than 30 percent above what is normally charged for bond underwritings (i.e., handling the paperwork and rounding up some buyers).

In Grassley’s letter, he includes a quote in the article to the effect that the local governments don’t care about the fees since there is a “large subsidy.” However, according to The Financial Times of London – and we agree with their assessment – Goldman and others are able to charge excessive fees because the financial crisis reduced their competition. When banks were required to raise more capital before they could pay back their bailout money, they did – and earned record fees for themselves in the process!

It is eerily similar to the driving forces behind the “subprime crisis” that was repeatedly blamed for the financial crisis. The financial sector gains its profits from fees – issuance fees, trading fees, underwriting fees, etc. – unheeding of the impact on the real economy, taxpayers and the cost to the nation as a whole.